Which Buy-Side Institutions Participate in Public Earnings Conference Calls? Implications for Capital Markets and Sell-Side Coverage
50 Pages Posted: 15 Feb 2016 Last revised: 7 Jun 2018
Date Written: April 25, 2018
The Q&A session of public earnings conference calls represents a unique opportunity for stakeholders to interact with senior management. We examine buy-side analysts’ participation on these calls and the associated capital-market implications. Using 81,000 transcripts for 3,300 companies from 2007 to 2016, we find that buy-side analysts ask questions on approximately 18% of calls. Management prioritizes buy-side analysts but discriminates against analysts from hedge funds when short interest is high. Relative to sell-side analysts, buy-side analysts’ interactions with management are shorter and exhibit less favorable tone and greater uncertainty about the firm’s future prospects. Buy-side analysts’ activity on public conference calls is also associated with increases in information asymmetry and reductions in sell-side activity.
Keywords: buy-side analysts, earnings conference calls, institutional investors, hedge funds, sell-side analysts, tone
JEL Classification: G10, G20, G23, G24, G29, D82, M41
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